Pre-NFP Analysis - 1.1090 critical

Tomorrow morning at 8:30a ET, the US Non Farm Payroll report is scheduled to be released. This could impact the EURUSD as the USD has been strengthening on the heels of a strong payroll report in November.

With today's post -ECB move knocking on the door of 1.1090, we have a critical level of which we can consider trading around.

First off, if prices remain below 1.1090 (the early September low), then it is possible they could retest 1.05 over the coming days.

The simplier result is that if 1.1090 is breached, then it locks in a 3 wave move from August to yesterday. That is important because it eliminates an impulse from August 24 high and elevates the probability of a retest of the 1.17 high.

Bulls need not go blindly in (nor should you ever do so) as another lower probability pattern is that Aug 24-Dec 3 was wave 1 of an ending diagonal . That pattern will likely rear its head around 1.14-1.15.

So bottom line, a break above 1.1090 is reason for bulls to get excited as several patterns point to multiple hundred pips higher.

DailyFX's Speculative Sentiment Index is shrinking as prices have been rising today. This adds more fuel to the bullish story as SSI is a contrarian tool. It currently sits near -1.84 as the number of short traders is growing.

Earlier today in the US Opening Bell webinar, we laid out 3 potential patterns. Two of them suggest a drop down towards 1.06-1.07. From there, bullish opportunities exist. We'll discuss if we get to 1.06-1.07.